Basics Of Banking In India: A Bank is a licensed financial institution that accepts deposits from the public people and advances loans. In most countries, banks are regulated by the national government or the Central Bank. Banks provide countless functions like deposits, withdrawals, currency exchange, forex trading, and wealth management. Banks act as a link between depositors and borrowers. Banks use the cash deposited by the customers to give credit facilities to needy people who want to borrow.

Banks vary in different sizes from small, community based institutions to global commercial banks. Banks make a profit by charging interest rates on loans. This profit is earned by charging a higher interest rate than the interest rate they pay to customer deposits. These interest rates must agree with the regulations set by the national government or the Central bank.

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Basics Of Banking In India PDF Download

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Banking History in India PDF Download

Banking Fundamentals

In India, Banks are classified into various types which have their own advantages and disadvantages in their activities. Each bank has a specific set of audiences. Some bank works in both rural and urban sectors while some focus mainly on the rural sector. The majority of the banks provide services in big cities and major towns. Bank plays a major role in the banking industry and an important function in the economy. The bank directs the needs of trade, industry, and farm funds. A country's growth mainly depends on the development of banking. Many sectors do deposit mobilization and credit disbursement through banks. Mobilizing resources and allocating them efficiently banks play an important role in the poor countries.

About Regional Rural Banks in India - Complete List

Types of Bank Accounts

The basics of Banking also include types of bank accounts and their features. The various types of bank accounts are as follows,

• • • Savings Account

    • Current Account

    • Recurring Deposit Account

    • Fixed Deposit Account

    • Salary Account

    • DEMAT Account

    • NRI Account

To know the complete details of types of bank accounts click the link provided below.

Details of Types of Bank Accounts in India

Types of Banks and their Functions

When it comes to the basics of banking, the types of banks and their functions play a major part. Here we have provided the complete details of the types of banks and their functions. Candidates can check the given information for their preparation for upcoming competitive examinations. 

Click the below link to learn the types of banks and their functions and roles.

Check the Types of Bank, Functions in India

Payments Bank is one of the Types of Banks in India. Here we have provided the link to know the Payments Bank in India in detail. 

Payment Banks in India - Eligibility, List, and their Headquarters 

Internet Banking / E-Banking

Internet banking is an electronic payment system where the customer of the bank, businesses, or other financial institutions conducts transactions through the website in online mode. Internet banking is also known as e-banking, online banking, or virtual banking. Internet Banking involves the customers to access their bank accounts through an electronic medium.

E-banking involves various advantages and disadvantages. The main advantage is that customers need not visit the bank branch often as the transaction is done online. With the availability of the Internet, digital banking services are easy for customers. E-banking is developing faster among bankers and customers as it involves hassle free services. Internet banking involves less human error as certain details are only entered by humans. The customers need not have to visit the bank branch for every transaction. This saves more time and money for the customers. E-banking breaks the geographical barrier for money transactions.

The disadvantages include disruption in technology, lack of personal security concerns, etc. 

Types of E-banking Services

Let us discuss the forms of e-banking and their services.

• • • ATM (Automated Teller Machine)

    • Electronic Clearing Service

    • Smart Cards

    • Debit Cards

    • Mobile Banking

    • Internet Banking

    • Tele Banking

    • Door-step Banking

Basic Banking Terminologies and Abbreviations

The basics of banking include certain banking terminologies and their abbreviations. Here we have provided some of the banking terminologies and their abbreviations in detail.

1. ACF - Account Credit Facility

2. AD - Authorised Dealer

3. ADB - Asian Development Bank

4. ADR - American Depository Receipt

5. AFS - Annual Financial Statement

6. AIRCSC - All India Rural Credit Survey Committee

7. ALM - Asset Liability Management

8. ASSOCHAM - Associated Chambers of Commerce and Industry of India

9. ATM - Automated Teller Machine

10. BG - Bank Guarantee

11. BIS - Bank for International Settlements

12. BoP - Balance of Payments

13. BSCS - Basel Committee of Banking Supervision

14. BSR - Basic Statistical Returns

15. CAD - Capital Account Deficit

16. CAG - Controller and Auditor General of India

17. CASA - Current Account Savings Account

18. CBS - Core Banking Solution

19. CC - Cash Credit

20. CD - Certificate of Deposit

21. CR Ratio - Credit Deposit Ratio

22. CF - Company Finance

23. CFRA - Combined Finance and Revenue Accounts

24. CGRA - Currency and Gold Revaluation Account

25. CGTMSE - Credit Guarantee Fund Trust for Micro and Small Enterprises

26. CIBIL - Credit Information Bureau (India) Limited

27. CII - Confederation of Indian Industry

28. CO - Capital Outlay

29. CP - Commercial Paper

30. CPI - Consumer Price Index

31. CR - Capital Receipts

32. CRAR - Capital to Risk-Weighted Asset Ratio

33. CRR - Cash Reserve Ratio

34. CVC - Central Vigilance Commission

35. DBOD - Department of Banking Operations and Development

36. DCB - Demand Collection and Balance

37. DCCB - District Central Co-operative Bank

38. DCM, RBI - Department of Currency Management, RBI

39. DD - Demand Draft

40. DEIO - Department of External Investments and Operations

41. DGCI&S - Directorate General of Commercial Intelligence and Statistics

42. DI - Direct Investments

43. DICGC - Deposit Insurance and Credit Guarantee Corporation of India

44. DID - Discharge of Internal Debt

45. DMA - Departmentalized Ministries Account

46. DRI - Differential Rate of Interest Scheme

47. DSBB - Dissemination Standards Bulletin Board

48. DVP - Delivery Versus Payment

49. ECB - External Commercial Borrowing

50. ECB - European Central Bank

51. ECGC - Export Credit and Guarantee Corporation

52. ECS - Electronic Clearing Service

53. EDMU - External Debt Management Unit

54. EEA - Exchange Equalization Account

55. EEC - European Economic Community

56. EEFC - Exchange Earners Foreign Currency

57. EFR - Exchange Fluctuation Reserve

58. EMI - Equated Monthly Installments

59. EXIM Bank - Export Import Bank of India

60. FCA - Foreign Currency Assets

61. FCCB - Foreign Currency Convertible Bond

62. FCNRB(B) - Foreign Currency Non- resident (Banks)

63. FCNRA - Foreign Currency Non Resident Account

64. FCNRD - Foreign Currency Non Repatriable Deposit

65. FDI - Foreign Direct Investment

66. FEMA - Foreign Exchange Management Act

67. FI - Financial Institution

68. FICCI - Federation of Indian Chambers of Commerce and Industry

69. FII - Foreign Institutional Investor

70. FIMMDA - Fixed Income Money Market and Derivatives Association of India

71. FISIM - Financial Intermediation Services Indirectly Measured

72. FLAS - Foreign Liabilities and Assets Survey

73. FOF - Flow of Funds

74. FPI - Foreign Portfolio Investment

75. FRA - Forward Rate Agreement

76. FRN - Floating Rate Note

77. GDP - Gross Domestic Product

78. GDR - Global Depository Receipt

79. G-Sec - Government Securities

80. IBRD - International Bank for Reconstruction and Development

81. IDRBT - Institute for Development and Research in Banking Technology

82. IEPF - Investors Education and Protection Fund

83. IFSC - Indian Financial System Code

84. IFC - Indian Financial Corporation

85. IFCI - Industrial Finance Corporation of India

86. IIBF - International Institute of Banking and Finance

87. IIBI - Industrial Investment Bank of India

88. IFC - International Finance Corporation

89. IFR - Investment Fluctuation Reserve

90. IIP - Index of Industrial Production

91. IMF - International Monetary Fund

92. IMPS - Immediate Payment Service

93. IP - Interest Payment

94. IRAC - Income Recognition Asset Classification

95. ISDA - International Swaps and Derivative Association

96. ISO - International Standards Organisation

97. KYC - Know Your Customer

98. KVP - Kisan Vikas Patra

99. KVIC - Khadi and Village Industries Corporation

100. LAF - Liquidity Adjustment Facility

101. LAS - Loans and Advances by States

102. LC - Letter of Credit

103. LDB - Land Development Bank

104. LERMS - Liberalised Exchange Rate Management System

105. LFAR - Long Form Audit Report

106. M1 - Narrow Money

107. M3 - Broad Money

108. MA - Moving Average

109. MCA - Ministry of Corporate Affairs

110. MIGA - Multilateral Investment Guarantee Agency

111. MOC - Memorandum of Changes

112. MSS - Market Stabilisation Scheme

113. MUDRA - Micro Units Development & Refinance Agency Ltd

114. NABARD - National Bank for Agriculture and Rural Development

115. NBFC - Non Banking Financial Companies

116. NEC - Not Elsewhere Classified

117. NECS - National Electronic Clearing Service

118. NEER - Nominal Effective Exchange Rate

119. NEFT - National Electronic Fund Transfer

120. NFA - Non Foreign Exchange Assets

121. NFD - Net Fiscal Deficit

122. NHB - National Housing Bank

123. NIF - Note Issuance Facility

124. NPA - Non Performing Assets

125. NPV - Net Present Value

126. NSSF - National Small Savings Fund

127. OD - Overdraft

128. OECD - Organisation for Economic Cooperation and Development

129. OLTAS - Online Tax Accounting System

130. PACS - Primary Agricultural Credit Societies

131. PD - Primary Deficit

132. PLR - Prime Lending Rate

133. RD - Revenue Deficit

134. RE - Revenue Expenditure

135. REER - Real Effective Exchange Rate

136. RIB - Resurgent India Bonds

137. RLA - Recoveries of Loans and Advancements

138. RTC - Repayment of Loans to Centre

139. RoC’s - Registrars of Companies

140. RR - Revenue Receipts

141. RRB - Regional Rural Bank

142. RTGS - Real Time Gross Settlement

143. RTP - Reserve Tranche Position

144. RUF - Revolving Underwriting Facility

145. RWA - Risk Weighted Asset

146. SCARDB - State Co-operative Agriculture and Rural Development Bank

147. SCB - State Co-operative Bank

148. SCB - Scheduled Commerical Bank

149. SDDS - Special Data Dissemination Standards

150. SDR - Special Drawing Right

151. SEBI - Securities Exchange Board of India

152. SFC - State Financial Corporation

153. SIDBI - Small Industries Development Bank of India

154. SIDC - State Industrial Development Corporation

155. SLR - Statutory Liquidity Ratio

156. SMG - Standing Monitoring Group

157. SNA - System of National Accounts

158. SWIFT - Society for Worldwide Interbank Financial Telecommunications

159. TB’s - Treasury Bills

160. TC - Temporary Change

161. TT - Telegraphic Transfer

162. UCN - Uniform Code Number

163. UPI - Unified Payments Interface

164. UTI - Unit Trust of India

165. UTR number - Unique Transaction Service number

166. WPI - Wholesale Price Index

167. YTM - Yield to Maturity

Basics of Banking: FAQs

Q. What are the basic banking services?

A. The basic banking services include accepting deposits, granting loans, payment and remittance services, overdraft, currency exchange, locker, money transfer, etc.

Q. What is the full form of ATM?

A. Automated Teller Machine is the full form of ATM.

Q. What is the full form of PLR?

A. Prime Lending Rate is the full form of PLR.